It also comes in the midst of an aggressive new hospital contracting process through which Medibank is forcing hospitals to pick up the bill for "avoidable" mistakes such as falls in care or unplanned readmissions.

"Seventy per cent of the market is now covered by Medibank's contracts. I can't understand why any hospitals would understand the logic of being accountable for mistakes under their own jurisdiction," Mr Savvides said.

He was able to hand down a strong final result before calling time on his 14 years at the nation's biggest health fund.

The first-half profit of $227.6 million, slightly ahead of analyst expectations, was boosted by a one-off $23.2 million tax benefit, unusually weak claims, improved claims management and the new hospital contracts.

Since Medibank was sold by the Abbott government in a $5.7 billion float in November 2014, it has slashed its claims ratio from paying out 87¢ in every dollar of premium revenue to 83¢ of every $1 of premium revenue.

Health insurance revenue rose 4.6 per cent to $3.1 billion during the half while group revenue, which includes complementary services, rose 3.4 per cent to $3.4 billion.

Despite the strong profit, a 0.6 per cent drop in the number of Medibank policyholders, and a 14.6 per cent increase in policy lapses, will alarm analysts who have long been concerned with the health of the premium Medibank brand.

"Management apportions most of this to a focus on more profitable product segments and flagged plans to invest heavily in brand building in 2H16 that, in combination with a lower headline premium price rise, should address the volume weakness."

Mr Savvides said he is focused on profitable growth only, and a major advertising campaign is now under way to reinvigorate the Medibank brand.

He said the insurer will share the benefits of its crackdown on costs with its customers, many of whom are downgrading their cover due to skyrocketing premiums.

"If we can constrain costs and be more efficient then not only will we reward shareholders ... we will have more affordable premiums," he said.

"Our customer base is very concerned about affordability and we want to do something about that."